The U.S. Postal Service saw revenue growth in 2013 but it lost money for the seventh consecutive year.
The number of first-class mail pieces dropped by 2.8 billion pieces and mandates that require the Postal Service to pre-fund health benefits for future retirees, helped account for a $5 billion net loss. Meanwhile, the Postal Service’s packaging service business added 210 million more packages that helped increased revenues in that department by 8 percent to $12.5 billion.
Operationally, the business has become more lean and has consolidated operations but needs help from Congress to make net losses disappear.
Jeff Williamson, chief human resource officer and executive vice president for the Postal Service, was in Madison recently where he met with commercial customers from some area businesses. He took time after the meeting to answer a few questions.
Q: What was your message to those commercial customers?
A: One of the key things we tried to drive home are all the things we’re doing in terms of innovations and the technology enhancement we’re deploying that really make mail more valuable. We’re really starting to see many of these technology enhancements and innovations starting to pay off. In the last quarter, we saw revenue growth over the same period last year. We’re seeing our shipping and our packaging up in the third quarter up over 6 percent. What we’re seeing is the value of mail combined with digital technology is really making an impact on businesses and marketers.
Q: Give us an example
A: Some of the things we’ve recently done is use QR (quick response) codes on direct mail pieces. We’re starting to see huge benefits with people clicking on a QR code driving them right to a website, then they might order something online that then comes back either through us or through somebody else potentially as a package and shipment through the system.
A number of years ago, people talked about physical, hard copy mail as being on the way out, we actually see there is great opportunities and synergies to partner with physical print and technology.
Q: So what is the future of package delivery?
A: Our objective around package delivery is to provide extremely efficient, affordable and unmatched customer service both for the senders as well as the recipients. We have increased insurance, improved tracking and visibility, and even the introduction of text messaging so that we’re telling customers that their product is on the way or it’s just been delivered. We’re really trying to get the message out that this isn’t your grandmother’s postal service. We’re blending what we’ve always done well, which is the delivery of mail and packages, with what technology is really affording us to do to land customers.
Q: But regardless of the innovation and revenue growth, it’s not enough to cover more than $5 billion a year in pre-funded health benefits for future retirees. How does the Postal Service address that?
A: Our strategy is two-pronged. Cost controls is extremely important to us, and I think we’ve demonstrated over the last decade through mail processing consolidation and operational efficiencies, that we’ve been able to reduce our work hours and that has allowed us to contain some of those cost pressures. We also have a proposal in front of Congress, which is another key piece of our need here, which is comprehensive legislative reform. It will basically allow us to not only eliminate the future retiree health benefit pre-funded payment, but it will also allow us to maintain a commitment that was made to those retirees as well as those future retirees.
Q: But, operationally, the Postal Service is profitable, right?
A: Correct. And that’s a combination of both expense reduction as well as revenue growth. We’re very optimistic about being able to move the needle, but we need to do other things in order to bring the expenses down. From our perspective, comprehensive legislative reform is absolutely a must. In order to make the necessary long-term investments in infrastructure, in vehicles and technology, we need comprehensive reform.
Q: There have been changes at the Madison Post Office with some jobs being moved to Milwaukee. What is the future of the Madison operation?
A: Madison is part of phase two consolidation. The plan is to move the outgoing operations from Madison to Milwaukee. The remainder of the operation, the destination mail (the mail that comes into Madison that is delivered to the local area) will stay here. One of the opportunities we have is that as the package business picks up, this isn’t just about how we consolidate operations. How do we utilize space or the equipment sets (in Madison) to take advantage of the new (packaging) business we’re seeing. Those things will evolve over time.
Q: Are we going to see more consolidations in Wisconsin?
A: No. Our plan now is to design a network that allows us to maintain efficient, effective service and affordable rates for the foreseeable future.
Q: What about the closing of more post offices?
A: Having a presence is important to us. It’s about access to ensure that our customers not only have access to the retail side of the business but that we also can effect expeditious delivery as well. You can only go so far from a central hub. There are certainly economies we can achieve, but service is very important as well.
Q: How do you maintain morale?
A: I think from a leadership standpoint, at all levels both locally and at a national level, we recognize the efforts of a wonderful workforce that goes above and beyond. The other thing that has helped, particularly over the last couple of years, it’s been more than just cutting. They’re seeing us invest in technology and come up with innovative solutions.
Q: How do you address the Postal Service’s aging fleet vehicle system?
A: We’re evaluating what the vehicle of the future really needs to look like for us. The vehicles themselves are various states of condition and age depending on where you are in the country and the mix of mail product. We will not have a one-size-fits-all fleet. You’re likely to see different types of vehicles in very high package delivery areas versus places that don’t get as many packages. In terms of investment, we’re being very prudent. We don’t have significant funds to invest and turn over our fleet as quickly as we would like but we are planning to make investments to modernize the fleet.
‘What we’re seeing is the value of mail combined with digital technology is really making an impact on businesses and marketers.’ JEFF WILLIAMSON, u.s. Postal Service